This paper assesses Danish energy and climate policies and discusses how they could be improved to ensure that objectives are met at least cost. It first depicts the evolution of GHG emissions and the energy mix since 1990. It then puts energy and climate policies and targets into perspective and sets out the main challenges. The final section assesses how policies could be shaped to enhance the efficiency of these targets and minimise their costs.

Denmark’s green growth strategy focuses on moving the energy system away from fossil fuels and investing in green technologies, while limiting greenhouse gas (GHG) emissions. On the whole, current policies should allow Denmark to reach near‐term climate change targets, but may not be sufficient to achieve its most ambitious targets. The challenge is to achieve objectives in a cost‐effective manner and to ensure that these ambitions contribute as much as possible to global GHG emissions mitigation and to stronger and greener growth in Denmark. Better exploiting interactions with EU and international policies, finding the appropriate way to support green technologies and reducing GHG emissions in sectors not covered by the EU emission trading scheme are key issues which need to be addressed to meet this challenge.